The wild ride in cryptocurrency markets got even wilder over the past week. Nearly the entire digital currency market experienced massive selling – especially the big names at the top like Bitcoin and Ethereum. From the big picture perspective, the market cap of the cryptocurrency market dropped nearly 50% from all-time highs in June.
Led by Bitcoin, Ethereum, Ripple, and others, the digital currency market climbed to a total value of $115 billion in mid-June. That number plunged all the way to close to $60 billion this past week, but has risen to about $70 billion at the time of this writing.
Some of the big names in the market have gotten hit the hardest, with Ethereum and Ripple down over 40% in a week. Bitcoin gave back about 27% of its value over the same period, and the price dropped below $2,000 for the first time since May.
So what’s causing the massive selloff?
There could be several reasons behind the major reversal in digital currencies. At least part of the selloff is due to concerns over Bitcoin’s technical future – which has been the subject of much debate. There could major changes coming to the protocol in August, and it could be scaring away investors.
Ethereum and other up and coming digital currencies could be the victim of the recent surge of ICOs and how successful they’ve been. Prices from recent ICOs may not be supported by the economics behind the projects. In other words, the prices went up too far, too fast.
Generally speaking, the market seems to have just overheated and we’re in a period of cooling off. Keep in mind, we’re still in the Wild West when it comes to the cryptocurrency market. Prices often see a lot of volatility – and they may for some time. Certainly, after the crazy run up in many of the products, investors were looking to cash out and take some money off the table.
I wouldn’t be surprised to see the big players in the market slowly gain back market cap. What’s more, once the Bitcoin tech debate is settled, it could easily continue its run higher. Just be aware, if you take your eye off the market for even a day, it very well could be in a very different place when you look back.